Why an empty arena may be better than a local bid

by James Mirtle on Aug 7, 2009 9:15 AM CDT Comment 96 comments

I've been doing some very basic math in my head over the past week or so when it comes to the Coyotes rink, Jobing.com Arena, and just how big of a bath the City of Glendale would take if the NHL team left town.

And for the life of me, I can't see how that situation is worse than accepting the sort of concessions Jerry Reinsdorf is asking for.

The basics, as near as I can tell, are that the arena originally cost $178-million to build and the city has the vast majority of that left to pay off until 2033. It was purchased by way of bonds, and with the bankruptcy in progress, the bond firm has been "keeping a keen eye on" the impact a relocation could have on the city's finances.

Of the $9-million or so the city has to repay each year on the arena, in principal and interest, about $4-million comes from the Coyotes (based on 2007 figures). I believe that figure has dropped as paid attendance has fallen, but I don't have the precise numbers. (There's also been some question whether the team is meeting all of its obligations when it comes to the lease agreement.)

On that basis alone, no Coyotes would mean about $4-million less in city revenues — plus whatever other financial benefits having the team play 41 home dates bring to the area (creation of jobs, businesses, etc.). What all of that cannot, in my mind, add up to is anywhere close to the "as much as $23-million" in concessions Reinsdorf is apparently after.

Regular FTR commenter J. Michael Neal, an accountant by day, took a spin through the debt figures last night and came to similar conclusions:

This is ugly. I went and looked at Glendale’s budgets. It’s a good thing I did, because the long post I had mostly written out had some bad assumptions in it. If anyone wants to look at the data, it’s here:

http://www.glendaleaz.com/Budget/AnnualBudgetBooks.cfm

I’m using the FY 2010 Annual Budget Book. I’m looking at the lines for the MPC Bonds – Series 2003A – Arena Tax Exempt, the MPC Bonds – Series 2003B – Arena Taxable, the AMFP Series 14 – Arena, and the AMFP Refunding Series 16 – Arena in the schedule for long term debt. Those look like the bonds I want. The first two series show principal being paid off each year, in addition to interest. The last two, which are much smaller, only show interest, so the principal is lurking in its entirety to be paid off eventually.

First, the $30 million James mentions is payments on the principal, though that’s a little tricky. Anything they paid in interest over those years is in addition to that. The reason I say it’s tricky is that, in the years I looked at, they are only paying about $1.7 million a year in principal. My guess is that the rest of it was on shorter term bonds that are already paid off, but some searching hasn’t helped me find the whole list of debt they took on.

What the schedule shows is that over the coming years, on those lines, Glendale has to make approximately the following payments:

FY 09-10: $1,735,000 principal, $8,050,000 interest
FY 10-11: $1,635,000 principal, $7,397,000 interest
FY 11-12: $1,780,000 principal, $7,944,000 interest
FY 12-13: $1,855,000 principal, $7,885,000 interest
FY 14 & Beyond: $149,135,000 principal, $103,093,000 interest.

That’s kind of an odd amortization schedule, so my guess is that there’s some floating rate stuff in there, which would mean that these are estimates. That’s somewhere between $9 million and $10 million per year until the principal is due on the second two lines of debt.

Keep in mind that this is just the debt service. It looks like there’s an additional $1.5 to $2 million per year, roughly, in operating expenses. ... That means that the city is paying out $11 to $12 million a year on this monstrosity.

It isn’t bringing in nearly that much. The relevant numbers are the same funds as in the operating expenses section, but in the Summary of Revenues by Fund part of the document. These total to about $6 million a year in revenues. This includes arena fees and the sales tax collected at arena events.

In other words, the city has been taking in at least $5 million less every year than it has paid out. Honestly, I’m really wondering whether the city might be better off financially by not making any concessions to a new owner, and just working out a settlement for damages to let the team go. With the numbers being thrown around as to what the Reinsdorf bid wants to make the deal, it wouldn’t take much of an up front cash payment from Ballsillie to have a present value larger than the revenues the city would be left with after making the concessions. Without pulling out a calculator, and just winging it, I wouldn’t be surprised if $100 million would do it, given that we’re talking about $3 to $4 million a year, tops, for about 24 years. That’s without taking into consideration the idea of the city putting up $15 million to cover losses after five years. Looking at these numbers, that’s a complete non-starter. The only thing that is is a fig leaf to keep the city from having to say up front that the team is leaving after that time frame if they are still losing money. There is no way in hell that Glendale will fork over that much when the time comes.

This is nuts. The citizens of Glendale should be marching on City Hall with pitchforks and torches.

I know that's a long comment, but there's a lot of good info in there, data that backs up what I'd originally been assuming. And the crazy part is that, just last night, Jim Balsillie's lawyer Richard Rodier said he had contacted Glendale months ago in order to potentially negotiate a deal along these lines.

The city wasn't interested at that point, and with good reason given the process was just getting underway, but as bizarre as it sounds, there may be a scenario where a Balsillie win with a small payout to Glendale is ultimately a better deal than keeping the team by way of a pile of new taxpayer generated revenues. (Keeping in mind that the arena would continue to make money by way of other events such as concerts, etc.)

Given the dollars coming in are so far below the city's current debt payments, this is an arena that should never have been built.

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I wonder what would have happened if everyone involved was more creative at the start instead of spending what I’m sure are insane amounts on lawyers fees. Maybe Moyes could have sold the team to Balsillie and recouped some of his losses, Glendale could have gotten some amount of cash from Balsillie for breaking the lease, Balsillie could have gotten the team for less than an expansion fee (payments to Moyes plus Glendale minus his legal expenses), Hamilton would have gotten a team, and possibly the AHL could have a team in Phoenix to keep the hockey market alive at a price point that would work in the market and getting some use out of the rink other than just non-hockey events. Toronto wouldn’t even notice a team in Hamilton, I would think – it would be like a pimple on the back of an elephant compared to the history and tradition of the Maple Leafs, and Buffalo might actually benefit from another nearby rival making visits. If you are going to profit from visiting fans, you may as well draw as many as possible by keeping the road trips short.

"Be kind, for everyone you meet is fighting a great battle." -- Philo of Alexandria

by Baroque on Aug 7, 2009 9:34 AM CDT reply actions 0 recs

This is perhaps a lesson in why smaller cities like Glendale shouldn’t get into the stadium business. They’re trying to tap into the Phoenix market, without the financial wherewithal (i.e. tax base) of a major city. It reminds me of the Pontiac Silverdome, which the city of Pontiac (population 66K) is stuck with like a boat anchor, long after the Detroit Lions moved to Ford Field.

More fun than a stick to the face!
On the Forecheck is SB Nation's blog covering the Nashville Predators.

by Dirk Hoag on Aug 7, 2009 10:03 AM CDT reply actions 1 recs

I’m sure you can speak to this Dirk, but one of the great things in Nashville is how integrated the rink is right in the hub of the city. Even in a non-traditional market, it’s pretty hard to avoid hearing and seeing the Predators influence as its all over the downtown where all of the foot traffic is already.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 7, 2009 10:08 AM CDT up reply actions 0 recs

Isn’t it the same situation in Columbus as well?

I know you were there not too long ago and I’m pretty sure it’s situated within walking distance of significant bars and downtown things to do.

by Afino on Aug 7, 2009 10:13 AM CDT up reply actions 0 recs

Sure, and the Columbus rink is a thing of beauty. That’s also a market with a fairly decent sized population base and no other major pro teams, so there are some things working in the Jackets favour.

Meanwhile, they’re still losing a bundle every year…

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 7, 2009 10:21 AM CDT up reply actions 0 recs

Well, you’d get some arguments that Ohio State football really is a “major pro team”…. ;)

by Afino on Aug 7, 2009 10:25 AM CDT up reply actions 0 recs

Naw

Their players’ salaries aren’t competitive enough for the NFL…

Pension Plan Puppets: A Toronto Maple Leafs blog and a group therapy session.

by PPP on Aug 7, 2009 11:30 AM CDT up reply actions 0 recs

I think that may change if they make the playoffs and actually win a few games in them. Even if they lose in the first round again this year, winning a home playoff game would be tremendous.

"Be kind, for everyone you meet is fighting a great battle." -- Philo of Alexandria

by Baroque on Aug 7, 2009 11:03 AM CDT up reply actions 0 recs

That’s the situation in Newark now with the Devils’ Prudential Center…I wonder if there have been any studies or reports showing the economic impact that place has had on Newark (positive or negative)

Glen Sather is a Hockey Genius.

http://glensathersucks.com/
http://twitter.com/ThGeneralissimo

by poploser on Aug 7, 2009 10:29 AM CDT up reply actions 0 recs

I know that this isn't about Glendale...

…but how is the area around The Rock now? I’ve only been to one game there, from Dec 2007, and one thing that I definitely noticed as I went outside to smoke a cig after the 1st period is that a bunch of the buildings around the back side were severely blighted and boarded up. It looked like the plywood over the windows had been there for years. Any improvement to the neighborhood at all?

by DanNOLA on Aug 7, 2009 10:41 AM CDT up reply actions 0 recs

Basically terrible. You get the sense that you really need 1/2 of Newark’s police force blocking off the streets in order to feel safe. There is allegedly a hockey bar right by the arena but I haven’t checked it out yet. Great transportation and the inside of the arena is great but outside? Yeesh.

The population of Pominville keeps rising!

by Blackcapricorn on Aug 7, 2009 10:53 AM CDT up reply actions 0 recs

Now that is really sad. To not even feel safe to cross the street.

"Be kind, for everyone you meet is fighting a great battle." -- Philo of Alexandria

by Baroque on Aug 7, 2009 11:03 AM CDT up reply actions 0 recs

I went to law school there, and its really not as bad an area as people think. The Pru Center is right at the edge of the main business center, and is only blocks away from the federal courthouse and city hall. Its not a heavily “pedestrian” area at all, and there’s always decent police presence in the area.

Glen Sather is a Hockey Genius.

http://glensathersucks.com/
http://twitter.com/ThGeneralissimo

by poploser on Aug 7, 2009 2:07 PM CDT up reply actions 0 recs

True

But it’s getting better. The Rock has definitely helped. I’ve been to Newark a number of times over the past 10 years, for various things and at various times, and it feels a whole lot safer than it did even 5 years ago.

Plus, the Rock was only the first part of the renovation program. They just started construction on the new park/pavillion (or whatever you want to call it) right outside the arena, and they’re only in the beginning stages of building a number of new buildings, including a massive shopping mall, in the area around the Rock.

by hocke26 on Aug 7, 2009 1:33 PM CDT up reply actions 0 recs

I know what you are saying and I definitely get that its the anchor tenant in bringing back the area but I just find it laughable if I drive to the game, the amount of police presence right near the stadium. Living in Gotham, I LOVE that its on a mass transit line but the City itself has a long way to go before I go there sans Hockey.

The population of Pominville keeps rising!

by Blackcapricorn on Aug 7, 2009 3:03 PM CDT up reply actions 0 recs

Exactly, not only is the Sommet Center right in the heart of downtown Nashville in terms of visibility, but it also means that the city (and the other businesses down there) has a vested interest in seeing it succeed.

More fun than a stick to the face!
On the Forecheck is SB Nation's blog covering the Nashville Predators.

by Dirk Hoag on Aug 7, 2009 10:29 AM CDT up reply actions 0 recs

James, this is a pretty counter-intuitive conclusion, great stuff.

Have there been any examples of a publicly funded stadium/arena working out for the “public”? I think you probably have to judge these things on a fairly long timeline, and I don’t know if we’re far enough out from this era to make a strong conclusion.

The Verizon Center in DC has completely revitalized what was once a terrible area. But with the gradual shift of population and lack of downtown space (due to height restrictions among other things), I wonder if that wouldn’t have happened even without the arena?

by Dr. Ice on Aug 7, 2009 10:48 AM CDT reply actions 0 recs

The arena in DC definitely was a stimulus for that to happen. I saw that area in early 2001 (there’s also that huge convention center further up the block) and it was still fairly run down. I was back around Christmas in 2003 and the difference was staggering. There’s no way that kind of rejuvination would have occured organically… they needed to invest in the area for it to happen. It wasn’t all about the Verizon Center, but that was definitely a catalyst.

Hockey blogging can't get any flatter.

by saskhab on Aug 7, 2009 10:57 AM CDT up reply actions 0 recs

But with the gradual shift of population and lack of downtown space (due to height restrictions among other things), I wonder if that wouldn’t have happened even without the arena?

I lived north of and worked in Baltimore, Maryland and Oriole Park at Camden Yards is a gorgeous ballpark – it really started the trend toward more retro, baseball-only parks instead of big concrete things with roofs, but the main drive toward revitalization there was the money invested in making the Inner Harbor area in general a pleasant and safe place to shop and visit the attractions such as the National Aquarium and the Maryland Science Center. The ballpark added to what was already happening, as did the football stadium across the road later on, but it wasn’t the main force.

"Be kind, for everyone you meet is fighting a great battle." -- Philo of Alexandria

by Baroque on Aug 7, 2009 11:01 AM CDT up reply actions 0 recs

I love the Baltimore harbour area. Absolutely gorgeous area…. hard to believe that place was generally a dump before.

Hockey blogging can't get any flatter.

by saskhab on Aug 7, 2009 11:16 AM CDT up reply actions 0 recs

Have there been any examples of a publicly funded stadium/arena working out for the "public"? I think you probably have to judge these things on a fairly long timeline, and I don’t know if we’re far enough out from this era to make a strong conclusion.

It depends upon what you mean by “worked out.” The evidence in the literature suggests that a new arena or stadium can help in the right circumstances, but that it tends to get a lot more credit than it should in those instances. Basically, an arena can’t (or almost never can) actually jump start redevelopment of an area. It has to be in a location where the rebirth has already begun, or is at least far along in the planning stages. It can be a part of a renaissance, but it can’t cause it. That is very much the case of both the Target Center and the Xcel Center here in the Twin Cities. Both neighborhoods had already started to take off (from very different starting points) before the arenas were built.

As a result of that, it’s very unclear that dumping public funds into building a new arena is a good idea. The proper question ask is not whether it makes the area better than it was. The proper question is whether building the arena has produced more benefits than spending that money in some other way. People lose sight of the concept of an opportunity cost. In most cases, analysis indicates that there are much more cost efficient ways to jump start a revitalization project. Think of what $200 million could do as seed money for various start ups, be they entertainment businesses or some different kind of development.

The other question that people forget to ask is whether the blight in the area being revitalized is actually cured, or whether it just gets pushed to another part of the city. For the city to be better off, it has to be the former, but the latter is distressingly common. An arena doesn’t solve the problems of a city. It’s more likely just to push them around.

by J. Michael Neal on Aug 7, 2009 11:43 AM CDT up reply actions 0 recs

I went to a weekend Devils game last season against the Flyers (a natural rival) and the upper bowl was mostly filled, but the lower bowl was half empty. Prudential Centre is one, if not, the most beautiful rink I have been to (I’ve been to Toronto, Ottawa, Montreal, Detroit, Washington and Quebec City). However, it’s not located downtown and does not attract downtown pedestrians and outgoers. Same problem in Ottawa where the Senators play in a field surrounded by cows and horses in Kanata!

The location of an arena is very critical to the success of a team at the gate (see Maple Leafs, Canadiens, etc.), almost as much as success on the ice. Since the Coyotes have been s’cking for so long on the ice, it’s normal they don’t garner interest at the gate because of their rink’s location.

It’s clearly time to move them out of Phoenix whether it’s in Hamilton or elsewhere.

by Fred Poulin on Aug 7, 2009 10:49 AM CDT reply actions 0 recs

Im not sure the idea for the Pru Center was ever to “attract downtown pedestrians”. It is in the heart of Newark’s business district (hello corporate sponsors!) and a 3 block walk from a large train station. I think the Pru Center was more likely to be used to try and bring people to Newark, than attract anyone already there.

Glen Sather is a Hockey Genius.

http://glensathersucks.com/
http://twitter.com/ThGeneralissimo

by poploser on Aug 7, 2009 1:57 PM CDT up reply actions 0 recs

native newarkians wouldn’t have the money anyway. yes, the area around the arena has greatly improved but the city itself is a giant turd.

"I suddenly hate Canada with a passion = BASTARDS!!!!!! " -Mr K, Upon hearing Moyes filing Chapter 11

by joe579 on Aug 8, 2009 5:36 AM CDT up reply actions 0 recs

What about an AHL team?

Great post James!

Whether it is Jim Balsillie, Reinsdorf or someone else – the Coyotes are not long for Glendale at which point Glendale will be stuck with a classic white elephant in their midst. If at least part of the issue is making sure that there is someone using the facility 41 nights a year – drinking overpriced beer and eating overpriced hot dogs – why not slip the Coyotes’ AHL-affiliate, or another AHL team (Hamilton may wish to relocate if Balsillie wins) into the Jobbing.com Arena? The Phoenix Roadrunners used to play in the area before the Coyotes, if I am not mistaken.

by HighlandersHockey on Aug 7, 2009 2:06 PM CDT reply actions 0 recs

The Hamilton AHL team is the Bulldogs, which Montreal’s farm team. I doubt the Habs would want their prospects that far from Montreal – my guess is that if Balsillie wins, the Bulldogs will share the Pepsi Coliseum with the QMJHL Quebec Remparts, in Quebec City.

by Habs on Aug 7, 2009 2:16 PM CDT up reply actions 0 recs

The Habs don’t own the Bulldogs, although the Bulldogs owner apparently put some money up as an outside investor with the Molson brothers for the Habs. The Bulldogs’ owner has gone on record as saying his first choice to move the team if a NHL team came into Copps would be to St. John’s.

Hockey blogging can't get any flatter.

by saskhab on Aug 7, 2009 2:23 PM CDT up reply actions 0 recs

Interesting… Wouldn’t the Habs have at least a say in a potential relocation of their AHL team?

St. John’s is a weird choice though – they relocated the Fog Devils of the QMJHL to Montreal because they couldn’t turn a profit, how does he expect an AHL team will fare?

by Habs on Aug 7, 2009 2:31 PM CDT up reply actions 0 recs

No way an AHL team comes back to Qc City, it didn’t work the first time the Habs put their farm team in Qc City.

by Fred Poulin on Aug 7, 2009 2:32 PM CDT up reply actions 0 recs

I’m not from Quebec City so not sure what happened… I know the Citadelles played only 3 seasons there before merging with the Bulldogs, and I know they were drawing good attendance figures.
So what went wrong? Why wouldn’t it work now?

by Habs on Aug 7, 2009 2:43 PM CDT up reply actions 0 recs

St. John’s hosted the Maple Leafs’ farm team for a long time. They only shut it down because the Leafs wanted their farm team in Toronto. St. John’s has supported AHL hockey before, and it really surprised people that the Fog Devils didn’t catch on. I guess they liked pro hockey better.

I think the Habs would have a say, given the more intertwined relationship the Bulldogs and Canadiens seem to be having with each other. That being said, the owner of the Bulldogs (Michael Andlauer) can do what he wants with his AHL team, the Habs could either purchase their own AHL franchise or work out an arrangement with another club, and ignore Andlauer’s wishes altogether.

Hockey blogging can't get any flatter.

by saskhab on Aug 7, 2009 3:44 PM CDT up reply actions 0 recs

The Coyotes opened Jobing.com/Glendale Arena. The ECHL Phoenix Roadrunners played at US Airways Center downtown, as did the Coyotes originally, and as did several predecessor minor league teams. An AHL team might be a good fit for Glendale, though they would be flying distance away from everyone else in the league, and I don’t know if an owner is out there willing to subsidize the travel expenses a la Calgary with the new Abbotsford team. OKC, Tulsa or Kansas City all have nice new arenas and fit better within the geographic footprint.

This is a spectacular post, and thanks to Michael as well. I know for my part, my early assumptions had been that the Coyotes weren’t asking for any more in concessions than they brought in, directly or indirectly. But there’s no way any of that adds up to over $20M, and I can’t see a legitimate argument that the Coyotes’ presence creates five times the value in the proposed special taxation district over what they bring in directly.

Glendale’s going to be an object lesson for suburban municipalities for years.

That 17-year-old Hokie sitting in the rafters in Greensboro didn't see any of this coming.

by JoshCVT on Aug 7, 2009 2:48 PM CDT up reply actions 0 recs

echl owners

complain about the flying costs of their playoff final alone. (I think besides trips to alaska, it’s team buses for every team) I dont think AHL owners have that much more capital to work with.

"I suddenly hate Canada with a passion = BASTARDS!!!!!! " -Mr K, Upon hearing Moyes filing Chapter 11

by joe579 on Aug 8, 2009 5:40 AM CDT up reply actions 0 recs

OKC is supposedly courting Edmonton’s AHL franchise for the 2010-2011 season, as they just closed the doors on the Central Hockey League Blazers. The supposed negotiations involve the Oilers’ farm club operating out of the Cox Convention Center (ie the “old” arena) rather than the new, about-tobe-upgraded-to-NBA-standards Ford Center. Part of the lease agreement with the Cox Conv. Center does call for renovations though, so I expect it will be an even better place to watch hockey than it currently is.

2008-2009 Colorado Avalanche: Dry Humping Mediocrity

by Mike @ MHH on Aug 10, 2009 2:31 PM CDT up reply actions 0 recs

Phoenix should definitely have pro hockey of some sort if it does come to the Coyotes leaving town.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 7, 2009 2:54 PM CDT up reply actions 0 recs

Question

James,

I know it’s unlikely/impossible with the way North American sports are dependent upon television revenue, but what would you think of a promotion/relegation concept?

Ideas theoretically worth exploring should that happen (note: I know it won’t):

Salary Cap – teams could construct X% of their budget year-to-year
-the remaining Y% would be constructed after the league structure is set for the year
-this remaining Y% would consist of 1-year contracts
-X% figure is certainly changeable – the idea is to have a team’s core intact year to year regardless of what division of play they’re in, but build their depth year-to-year based on a realistic financial figure for their level of play

Revenue Sharing – Revenue would be shared among all teams in both divisions of play – this ensures the ‘haves’ and ‘have-nots’ do not become too distant from each other. This also assures that everyone has equal chances of making it on to national television and/or internet television at some point or another.

Organization:
1st Division : 20 teams (2 conferences of 10)
2nd Division : 16 teams (2 conferences of 8)
Bottom 2 teams from 1st Division relegated to 2nd Division each year within conference. Top 2 teams from 2nd Division promoted.

Sample schedule:
1st Division team:
-Home-and-Away vs. each 2nd Division intraconference team (16 games)
-Home-and-Away vs. each 1st Division team in opposite conference (20 games)
-5 games each against 8 1st Division intraconference opponents (40 games)
-6 games against closest geographic intraconference 1st division team (6 games)
=82 games

*might possibly require eliminating the draft. That would be fine so long as the salary cap remains.

by VA Libertarian on Aug 7, 2009 3:33 PM CDT up reply actions 0 recs

This would allow for clubs in 36 markets, but keep a high quality level of product for the top 20 teams (1st Division). It could also address the push for clubs in places such as Hamilton, Las Vegas, Kansas City, Winnipeg, Hartford, and/or Quebec City. Small-market and non-traditional market teams would expend only so much money as is needed for the level of play they wish to perform at in a given year (though possibly drive up traveling costs a bit).

This is the way many sports leagues in Europe operate so that when a disaster like Phoenix or Nashville occurs, the club is relegated to a more appropriate level of play and expenditure.

by VA Libertarian on Aug 7, 2009 3:36 PM CDT up reply actions 0 recs

Promotion/relegation without having a difference in TV revenue is a non-starter. It doesn’t even make sense. People aren’t going to want to watch the second division on national TV. You also need to make sure that the owners have a strong enough incentive to win. If you let the second division get TV revenue and have a lower cap, you’re going to find owners that live off the revenue sharing without improving the team.

There are plenty of other problems here. I really like the idea of promotion/relegation, but they need to be separate leagues. There are also other changes that you’d have to make to the structure of North American sports to make it work.

by J. Michael Neal on Aug 7, 2009 4:36 PM CDT up reply actions 0 recs

I think the idea wouldn’t be to give the 1st and 2nd division clubs the same cut of revenue, but make it comparable enough that the haves don’t distance themselves from the ‘have-nots.’ This is why I also proposed scrapping the draft, so good players don’t get stuck on 2nd division teams.

Who cares if 2nd division teams stay down without trying to improve their team? It’s the 2nd division – that’s the point. It keeps the losers down. Imagine if they did this in basketball. Donald Sterling would have to at least attempt to make the Clippers good or he’d risk losing out on a larger piece of revenue sharing.

Also, 2nd division teams wouldn’t be on television, save for maybe late-night ESPN2 (hey, if they’ll show darts, arena lacrosse, the AFL, and poker re-runs, they can show NHL2).

by VA Libertarian on Aug 7, 2009 6:50 PM CDT up reply actions 0 recs

I can’t see it ever happening unless new leagues are started from scratch. I wonder if it might work in something like junior hockey, though.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 7, 2009 5:37 PM CDT up reply actions 0 recs

Well does that mean GLENDALE (do people forget it is a different city of something?)

gets left out with they’re shining arena

"I suddenly hate Canada with a passion = BASTARDS!!!!!! " -Mr K, Upon hearing Moyes filing Chapter 11

by joe579 on Aug 8, 2009 5:41 AM CDT up reply actions 0 recs

That’s where the suitable hockey arena is, so I assume that’s where a new team would play.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 8, 2009 1:13 PM CDT up reply actions 0 recs

So is Mississauga. It’s still part of the Greater Toronto Area, and if a major-league team were to start there tomorrow, they’d be the Toronto Somethingorothers.

SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there)

by Doogie2K on Aug 8, 2009 1:28 PM CDT up reply actions 0 recs

They could be the Toronto Massasaugas playing in Mississauga and really confuse the heck out of everyone (a massasauga is a species of rattlesnake – the Eastern Massasauga is native to Michigan, Illinois, the southern Great Lakes region, and southern Ontario).

"Be kind, for everyone you meet is fighting a great battle." -- Philo of Alexandria

by Baroque on Aug 8, 2009 2:04 PM CDT up reply actions 0 recs

Or maybe they could take a page from MLB and become, say, the Mississauga Massasaugas of Toronto.

by dzuunmod on Aug 8, 2009 2:45 PM CDT up reply actions 0 recs

//sound of sports writers everywhere overworking spellcheck function

"Be kind, for everyone you meet is fighting a great battle." -- Philo of Alexandria

by Baroque on Aug 8, 2009 2:49 PM CDT up reply actions 0 recs

First time they come to Edmonton, Terry Jones retires in frustration.

This clearly needs to happen.

SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there)

by Doogie2K on Aug 8, 2009 9:36 PM CDT up reply actions 0 recs

Heh. And of course, the number of esses is different in each word, plus one having an “a” where each “i” is in the city. So many possibilities for erroneous permutations.

"Be kind, for everyone you meet is fighting a great battle." -- Philo of Alexandria

by Baroque on Aug 8, 2009 10:12 PM CDT up reply actions 0 recs

Dare we dream?

I've seen enough to know that I've seen too much.

by Smoboy41 on Aug 9, 2009 1:22 PM CDT up reply actions 0 recs

Look beyond the arena....

Michael O’Neal’s analysis and thought experiment is interesting — and his conclusion unavoidable. But Glendale is on the hook for more than just an arena.

Like most things in Arizona, the story here is about turning dirt into gold. The sports complexes in Glendale were farmland less than 10 years ago.

Glendale had the “bold vision” (now looking like a “hallucination”) that it could develop that land in a big way by relying on the perfectly legal Ponzi scheme of debt and sales tax financing.

Arizona’s taxing structure encourages cities to seek out new sources of sales taxes. It’s why one smallish city gave $200 million in incentives to a mall developer. It’s also why we have too many stores for too few people.

To simplify the Glendale formula: Borrow more, develop more, pay off the debt by taxing, fans, shoppers, hotel guests.

So now Glendale is home to a massive pro sports complex – a football stadium, the hockey arena, the spring training ballpark where Jerry Reinsdorf’s Chicago White Sox and the Dodgers play, plus a hotel, shopping/entertainment complexes. and perhaps, someday, even basketball – USA Basketball wants to move its headquarters to Gdale but the financing is months behind schedule.

Glendale has several hundred million dollars in long-term debt tied up in these projects (not including the football stadium). The bond investors are being paid, the city’s debt rating has not been lowered. But the revenue stream is drying up.

As Michael notes, the city’s budget documents show it is falling short of generating the necessary revenue for the arena debt. The Yotes not paying their full lease obligation is costing $3-4M and counting.

The surrounding Westgate food/retail complex is not delivering the projected tax revenue to help pay the debt.

So this House of Cards is teetering. Then there’s this: Debt payments start soon on the Sox ballpark. But there is no sales tax revenue stream in place yet to meet that obligation, because there is no development around the ballpark. It’s still dirt, waiting for financing that is also months behind schedule.

This is one of the Reinsdorf connections that’s often missed. He and his family stand to benefit financially from development around the ballpark. That, in part, is why the concessions to his bid group would create a taxing district that includes the Yotes arena, Westgate next door AND the ballpark area about two miles away — cash for the Yotes and the Sox? (Is that why the Cardinals’ Mike Bidwill is so upset? Or does he want a piece of the action, too?)

Now the House of Cards looks even shakier. How will the debt on the ballpark and the arena be paid from the projected revenue sources?

Reinsdorf appears to be financially insulated from that problem. I have no idea how much it matters to him. Maybe not at all.

I haven’t even mentioned the Indian nation that wants to open a casino/resort half a mile from the Arena/CardsStadium/Westgate. Glendale appears determined to go to war to fight this perceived threat to its sales tax base (neighboring cities are welcoming the casino).

Finally, many people here in Phoenix and outside the state wonder if any of this matters to Glendale taxpayers. Many I speak to are quite proud of those huge buildings that alighted like UFOs on a vast dirt landing pad.

The city council meets Tuesday for the first time since the Coyotes bailout was disclosed — and the potential move to Canada was back in play. Perhaps taxpayers will speak up.

All it would take is one sharp gust to topple their House of Cards.

by Brahm Resnik on Aug 7, 2009 4:08 PM CDT reply actions 7 recs

Michael O’Neal’s

Just Neal. My background is Scottish, not Irish. Other than that, I like the comment.

by J. Michael Neal on Aug 7, 2009 4:39 PM CDT up reply actions 0 recs

OH

I know both sides HATE it when one is mistaken for the other, as easy as it is to do

"I suddenly hate Canada with a passion = BASTARDS!!!!!! " -Mr K, Upon hearing Moyes filing Chapter 11

by joe579 on Aug 8, 2009 5:43 AM CDT up reply actions 0 recs

Sorry Michael.

by Brahm Resnik on Aug 8, 2009 12:06 PM CDT up reply actions 0 recs

Not a problem. It’s usually when I say it that people get it wrong. I’m “Mike O’Neal” in half a dozen places.

by J. Michael Neal on Aug 8, 2009 12:45 PM CDT up reply actions 0 recs

FYI, for those unaware, Brahm is a reporter/anchor for KPNX in Phoenix. His Twitter feed and blog have been very useful sources of information about the ongoing Coyotes saga, IMO.

by Robert Cleave on Aug 7, 2009 4:47 PM CDT up reply actions 0 recs

Hmmm, so it sounds like the bonds that financed the arena are general obligation bonds (backed by the full faith and credit of the issuer) as opposed to revenue bonds (which are only paid as the underlying revenue stream allows)?

Is the issuer of the arena bonds the City of Glendale itself or some specialized district/authority/agency that is legally separate from the municipality?

If the City of Glendale has directly issued general obligation bonds to fund the construction of a sports arena (to speak nothing of the other sports venues referenced above) without a plebicite approving such a move, that would constitute gross negligence bordering on the criminal on the order of the Orange County, CA debacle. If approved by plebicite, it’s still gross negligence, but having been approved by the populace that is now on the hook for the performace of the bond obligations, the electorate has dug its own grave with nobody to blame but themselves.

2009-2010 Colorado Avalanche - "Hey Brother, can you spare a Left Winger?"

by Hopfenkopf on Aug 7, 2009 4:53 PM CDT up reply actions 0 recs

Yes, they are general obligation bonds. Moody’s (or S&P, not positive which) has already said that the bonds are still good. They’re backed by the city of Glendale itself. They have a claim on sales tax revenue.

Now, Moody’s has also said that they’re considering lowering the city’s rating depending upon how this plays out. Aside from all of the sports related stuff, there are other land mines in that budget. The city is heavily dependent upon sales tax revenue, which has declined two years in a row.

As I said, it’s time for the pitchforks and torches. Frankly, if the city is not already talking to Ballsillie trying to work something out, they should be relieved of their duties as of now.

by J. Michael Neal on Aug 7, 2009 5:50 PM CDT up reply actions 0 recs

Thanks for the confirmation/clarification.

Wow, the complete and utter dereliction of fiduciary duty in this case just boggles my mind.

I guess that’s why I never made it to Wall Street or “public service”. Not brazen enough to steal like that I guess. At least I sleep at night.

2009-2010 Colorado Avalanche - "Hey Brother, can you spare a Left Winger?"

by Hopfenkopf on Aug 7, 2009 11:08 PM CDT up reply actions 0 recs

Good to hear from you Brahm… thanks for stopping by.

Interesting that we’ve got a Canadian who’s now a local covering this story closely in the desert.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 7, 2009 5:43 PM CDT up reply actions 0 recs

This is exactly why we shouldn’t have publicly-financed sports facilities (or publicly-financed a lot of things, for that matter). Taxation is theft.

by VA Libertarian on Aug 7, 2009 6:51 PM CDT up reply actions 0 recs

Taxation is theft.

Yeah, but so is the guy stealing your TV due to the absence of the police force funded by those instruments of larceny to which you refer.

But I digress.

2009-2010 Colorado Avalanche - "Hey Brother, can you spare a Left Winger?"

by Hopfenkopf on Aug 7, 2009 11:11 PM CDT up reply actions 1 recs

Or the police stealing your TV, shooting your dog or tazering you, and then arresting you for complaining… along with the money stolen via taxes. But I digress.

http://www.injusticeeverywhere.com/ or Balko .

by rsm on Aug 7, 2009 11:37 PM CDT up reply actions 0 recs

No reasonable individual would refute the fact that there exists injustice in the world. Unfortunately, that injustice is sometimes perpetrated by corrupt/evil members of the police. That’s where Internal Affairs and/or the local District Attorney need to step in. Then again, those forces and courts generally, are funded through taxes, so I guess they’re out too.

Is your argument that the amount of injustice overall will drop by abolishing an organized constabulary and turning the world into some kind of Mad Max scenario as your philosophical compatriot advocates below? I mean, the number of murders based on a highly armed citizenry blowing each other away because the other’s dog took a dump on his lawn….

I thought Mad Max was a good movie, but I don’t see it as a societal condition to which we ought collectively aspire. Perhaps that’s where we just need to agree to disagree.

2009-2010 Colorado Avalanche - "Hey Brother, can you spare a Left Winger?"

by Hopfenkopf on Aug 8, 2009 7:34 PM CDT up reply actions 0 recs

I’ll agree to disagree here. Wrong forum to continue a discussion of this nature.

And how about those Canucks, eh?

by rsm on Aug 8, 2009 7:41 PM CDT up reply actions 0 recs

Concur re: continuation of the discussion.

The only thing that I can say re: the Nucks as an Avs fan is that I hope Mr. Raycroft gets LOTS of playing time! :)

2009-2010 Colorado Avalanche - "Hey Brother, can you spare a Left Winger?"

by Hopfenkopf on Aug 8, 2009 7:57 PM CDT up reply actions 0 recs

Too funny.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 8, 2009 9:07 PM CDT up reply actions 0 recs

Always good to engage with Avs fans. Hope Statsny gets mono.

I've seen enough to know that I've seen too much.

by Smoboy41 on Aug 9, 2009 1:29 PM CDT up reply actions 0 recs

At least he’s kissed a girl, unlike your top centermen…

2008-2009 Colorado Avalanche: Dry Humping Mediocrity

by Mike @ MHH on Aug 10, 2009 2:48 PM CDT up reply actions 0 recs

And how about those Canucks, eh?

Glad we could give Raycroft enough of a showcase for you to take a flier on him…

2008-2009 Colorado Avalanche: Dry Humping Mediocrity

by Mike @ MHH on Aug 10, 2009 2:48 PM CDT up reply actions 0 recs

The cars were cool, though.

I've seen enough to know that I've seen too much.

by Smoboy41 on Aug 9, 2009 1:27 PM CDT up reply actions 0 recs

Have you people ever heard

of alarm systems and sleeping with a loaded gun under your pillow? we are so soft nowadays.

"I suddenly hate Canada with a passion = BASTARDS!!!!!! " -Mr K, Upon hearing Moyes filing Chapter 11

by joe579 on Aug 8, 2009 5:47 AM CDT up reply actions 0 recs

leave it to mr libertarian to ruin our fun. However, as a fan of the SF Giants (MLB) who are one of the two pro sports franchises in the world to privately fund their own stadium, I see your point.

"I suddenly hate Canada with a passion = BASTARDS!!!!!! " -Mr K, Upon hearing Moyes filing Chapter 11

by joe579 on Aug 8, 2009 5:46 AM CDT up reply actions 0 recs

There may be more than two pro sports franchises that funded their own stadiums(stadia?).
I know the Canucks built GM place on their own.

by yrmom on Aug 8, 2009 8:48 AM CDT up reply actions 0 recs

And the Habs fully paid for the (then) Molson Center, now Bell Center, in Montreal.

by Habs on Aug 8, 2009 9:50 AM CDT up reply actions 0 recs

Ottawa

The Senators funded their arena, plus had the bonus of Bob Rae and the NDP opposing the zoning to the OMB which caused the project to be scaled back. Plus the team had to pay for the interchange off the 417 to the arena, which allowed development to explode in that region of the city.

by Exit716 on Aug 8, 2009 4:55 PM CDT up reply actions 0 recs

Can I assume that the Leafs funded the Air Canada Centre as well?

by yrmom on Aug 8, 2009 5:15 PM CDT up reply actions 0 recs

It was originally started by the group that owned the Raptors at the time, but at some point MLSE took over ownership of that team and the arena. The Leafs weren’t originally going to even play at the ACC but, a change was made I believe as the building started to go up.

A lot of the Canadian teams own their buildings.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 8, 2009 5:44 PM CDT up reply actions 0 recs

I think it’s five of the six, with the Oilers being the exception. That sound right?

SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there)

by Doogie2K on Aug 8, 2009 9:37 PM CDT up reply actions 0 recs

Don’t think either Alberta team owns its rink.

Blogging on hockey at fromtherink.com

by James Mirtle on Aug 8, 2009 10:30 PM CDT up reply actions 0 recs

Possibly. I don’t know for sure whether the Flames own the Saddledome or leased it from the Stampede or the City. I know for sure the Oilers lease Northlands Coliseum.

SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there)

by Doogie2K on Aug 9, 2009 11:31 PM CDT up reply actions 0 recs

And that is the paradox

Americans subsidize sports teams but not health care.
Canadians have universal health care and make the sports teams pay their own way.

by Exit716 on Aug 9, 2009 12:30 AM CDT up reply actions 0 recs

Not always

I believe the New England Patriots built their own field. Some other teams have, as well, if they had the money for it.

And some health care is subsidized – despite the inane rants of some who want “government hands off my Medicare,” there are a few programs that work very well. They just don’t cover everyone because otherwise how are the insurance companies going to make any profits?

"Be kind, for everyone you meet is fighting a great battle." -- Philo of Alexandria

by Baroque on Aug 9, 2009 6:26 AM CDT up reply actions 0 recs

Palladium Drive caused a development explosion? Maybe an explosion of car dealerships.

by hockeycountry on Aug 9, 2009 3:15 PM CDT up reply actions 0 recs

For real. When one drives into Ottawa from the west, is the arena still not the very first thing one sees?

by dzuunmod on Aug 9, 2009 4:22 PM CDT up reply actions 0 recs

Yup but Palladium Drive pretty much only services Scotia Bank Place. There’s been lots of development in the west end but that off-ramp doesn’t have that much to do with it from what I can tell.

by hockeycountry on Aug 9, 2009 6:04 PM CDT up reply actions 0 recs

Let them go...

Glendale and any potential Phoenix owner would be better off letting the Coyotes walk, and then bidding on another team to move them into the desert into a comfortable lease deal.

Contributor to The Copper & Blue, and leader of The Cult Of Hartikainen.

by Derek Zona on Aug 7, 2009 10:09 PM CDT reply actions 0 recs

The complete and utter lack of local interest in owning a team in Arizona will likely leave the second half of that plan stillborn. I suspect that if the Coyotes leave, it will close the book on the Phoenix metro as a major league hockey market.

by Resolute on Aug 7, 2009 11:22 PM CDT up reply actions 0 recs

Hey, if Atlanta can get a second team, Phoenix sure can. It’s too big not to try again a decade or two down the road.

SNN Sports - A theoretical Oilers blog (i.e. theoretically, I write stuff there)

by Doogie2K on Aug 8, 2009 4:41 AM CDT up reply actions 0 recs

glendale a bad location

as a fan having gone through what yotes fans are going through ,i can sympatheize.as has been mentioned before one of the things that is diffrent about the predators arena is it is a vibrant part of downtown nashville and so many local businesses count on the preds and the arena for thier financial lifeline.the arena in glendale even if you take the coyotes completely out of the picture,is going to have financial issues for years to come.having an arena so far away from phoenix is proving to be a financial disaster. i am never in favor of a city losing a franchise,but just looking at the financial numbers that have been presented, i do not know how they can succeed under any owner in glendale.

by predator63 on Aug 8, 2009 11:02 AM CDT reply actions 0 recs

What Glendale does next....

My best guess about Glendale leadership’s framing of the Reinsdorf concessions is this: We either lose half-a-billion dollars if this team bails out because of that no-goodnik Balsillie, or we “invest” several million (actually up to$100M) with the NBA, World Series champ and all-around-good-guy Jerry Reinsdorf. Reinsdorf (who will not spend a dime on the team) has such a magic touch that fears of the team leaving in five years are way overblown. In fact. Commissioner Gary Bettman assures us the league will do everything in its power to keep the team in Glendale.

by Brahm Resnik on Aug 8, 2009 12:16 PM CDT up reply actions 0 recs

You know, maybe it’s time for all NHL fans to sit on their wallets for a while if this sort of stuff happens. The NHL needs ALL of us buying tickets, jerseys and other paraphernalia to get the extra cash they use to prop up long-time losing causes. I’m all for help through some rough times (being an Ottawa fan and a beneficiary) but there has to be a limit.

by hockeycountry on Aug 8, 2009 2:02 PM CDT up reply actions 0 recs

Unfortunately, there’s nothing to do in Canada when it’s cold except fornicate and play/watch hockey. Therefore, Canadians will continue to line the NHL’s coffers every year and I don’t blame them.

2008-2009 Colorado Avalanche: Dry Humping Mediocrity

by Mike @ MHH on Aug 10, 2009 3:00 PM CDT up reply actions 0 recs